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American Funding of Israeli Settlements

The New York-based group T’Ruah: The Rabbinic Call For Human Rights recently filed a complaint with the State Attorney General against the American arm of an Israeli organization called Honenu. The complaint is based on the fact that Honenu offers financial assistance to the families of both accused and convicted Jewish terrorists in Israel.

It is no secret that American charities send tax-deductible donations to Israeli settlements. And, while supporting settlements may be contrary to the stated policy of the United States, sending such donations is neither illegal nor a violation of IRS regulations governing tax-deductible charitable donations.

What makes Honenu different is that they act in support of people who have committed acts of terrorism. It is on this basis that T’Ruah filed its complaint.

Honenu’s activities were exposed in a report by Israel’s Channel 10. According to that report, Honenu sent funds to the family of an Israeli convicted of killing seven Palestinians in May 1990; the families of two Israelis convicted of attempted murder for trying to plant a bomb at a school in East Jerusalem in 2002; and an Israeli who kidnapped and abused a Palestinian boy in 2010. Further, according to Israeli reporter Uri Blau, Honenu has also sent money to the family of Yigal Amir, who assassinated Yitzhak Rabin in 1995.

As T’Ruah’s complaint states, ““Honenu is doing exactly what Hamas and the PLO have been criticized for — providing personal support, if not incentives, for those who commit terrorist acts.”

Will the AG uphold T’Ruah’s complaint? This is questionable. The basis for criminalizing such donations has usually been that the money is supporting groups appearing on the State Department’s list of terrorist organizations. The case T’Ruah is building is that these groups should be included on that list or that the spirit of the law – that American charitable donations must be barred from supporting acts of terrorism – be carried out. In the past, the Hebron Fund has been the target of similar complaints, though no action has been taken yet.

But the issue does not stop there. As so-called “price tag” attacks (where settlers attack Palestinians in response to Israeli decisions to take down illegal outposts or other measures that Israel takes from time to time to limit settlement activity) have escalated, even the current government in Israel — one of the most right-wing, pro-settlement ever elected — has taken to using the “terrorist” label against the groups that commit these acts. That opens the door for stigmatization even if the American tax authorities will not revoke tax-exempt status from organizations that support the radical settlers in the West Bank.

Stigmatizing such organizations can have a significant impact. While Honenu is a relatively small organization, the funds it raises are channeled through the Central Fund of Israel, a much larger NGO which raised over $70 million from 2009-13 for a variety of causes in Israel, and which was also named in T’Ruah’s complaint. The overwhelming majority of these causes are perfectly legitimate charities. If there is a political cost for supporting a group like Honenu, one which could put other donations at risk, perhaps the Central Fund and other large funding sources would end its relationship with such groups

To many, it might seem absurd that Americans can get tax deductions for supporting settlements in any way when United States policy has always opposed them. But we must keep in mind that the US has deliberately loose regulations about charitable donations and, in many ways, this helps organizations across the political spectrum. While no non-profit can violate the law, many can and do oppose a wide variety of US policies.

Legality is the dividing line. Europe recognizes the illegality of settlements under international law. As the European Council on Foreign Relations points out, this opens the door for the EU and its member states to remove the tax-exempt status of organizations supporting the settlements, whether the settlers in question are engaged in acts of direct violence or not.

In the United States, however, the legality of the settlements is a politicized question that has become very murky. In 1978, the State Department Legal Advisor deemed settlements “inconsistent with international law,” a stance that has never been officially rescinded. However, every President since Ronald Reagan has avoided calling settlements illegal and Congress has never made any such determination. This makes it much more difficult to slow funding from American charities that is flowing to the West Bank.

Whether T’Ruah’s complaint will result in Honenu being stripped of its non-profit status or not, it is imperative that groups that support settlements be held up to the light, so that people who donate can make an educated choice about what they support. More importantly, if it serves as a vehicle to push the United States to shift its position on the legality of the settlements to one that is in line with almost the entire world (the overwhelming majority of international legal opinion), it will have accomplished a lot more than cutting off a few dollars from one group that supports the most radical settler elements.